Policy flip-flops and "experimentation" on auto industry will have negative impact on India's overall economy, auto industry body SIAM said today hitting out against the proposal to hike cess on big cars and SUVs to 25 per cent.

Seeking a stable and predictable policy regime, the Society of Indian Automobile Manufacturers (SIAM) also said frequent policy changes over the past few years have shaken the confidence of companies who wanted to invest in India.

"When somebody invests in the country he is looking for stable policy regime, he doesn't want flip flops in a months time," SIAM Director General Vishnu Mathur told reporters here.

Over the past few years, there have been so many flip flops and there have been so many ambiguities in policy which have changed everything for the companies, he added.

"This industry contributes almost 50 per cent of the manufacturing GDP so if any experimentation is done on this industry, if it doesn't get the kind of support that is required it could be very very negative for the overall economy," Mathur said.

Big cars and SUVs are now facing possible hike in cess under the new tax regime with the GST council recommending increasing the maximum ceiling to 25 per cent from 15 per cent over and above the top tax rate of 28 per cent.

Mathur said that when the new GST rates were announced the industry welcomed them.

"We thought that the government has now fulfilled its promise of last four years to rationalise the tax. Now suddenly if they say the previous pre-GST rates are the benchmark that means all the discussions we had with the government over the last four years stands nullified," he added.

He said the auto industry needed a stable and predictable policy regime.

"They (companies) see India as a risky market with continuous change in policies... What we need is a stable and predictable policy regime. We have enough challenges in our hands in terms of technology," Mathur said.

He added that the good work done over the past 25 years in terms of nurturing the industry through a stable conducive policy regime will come to a bought if such changes continued.

SIAM Deputy Director General Sugato Sen said various projects like auto mission plan (AMP) were not heading anywhere because of "total vacuum" in terms of which direction to take.

"Nobody knows, somebody is talking about bio fuel, somebody is talking about electric vehicles," he added.

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